Cannabis Organizations Should Adhere to Federal Employment Laws, Appeals Court Says

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A federal appeals court ruled final week that cannabis organizations are nevertheless topic to federal minimum wage and overtime laws regardless of the business becoming illegal at the federal level.

Lawyers representing Helix TCS Inc, a Colorado-primarily based firm that offers safety and application solutions for the state’s cannabis operators, argued that mainly because industrial cannabis violates the Controlled Substances Act, business workers are not protected by overtime guarantees codified in the Fair Labor Requirements Act.

The 10th U.S. Circuit of Appeals in Colorado rejected that argument on September 20, acquiring alternatively that “employers are not excused from complying with federal laws just mainly because their organization practices are federally prohibited.”

The case issues Robert Kenney who worked for Helix TCS Inc. as a safety guard. His lawsuit alleges he and other safety guards often worked more than 40 hours per week but had been denied overtime spend. Helix TCS Inc., the lawsuit alleges, opted to spend the workers salary alternatively of overtime.

In its choice, the court did not rule on the details of the case, but permitted the case to move forward by reaffirming a prior court’s choice to deny Helix TCS Inc.’s motion to dismiss. Kennedy’s case can now move forward, the court identified, exactly where the details of the case can be challenged.

Lawyers for each the plaintiff and defendant could not be reached for comment.

Jennifer McGrath, a cannabis lawyer primarily based in Southern California, told Cannabis Wire that the case clears up what she says most folks would currently assume—that the identical guidelines regarding employment apply to cannabis and non-cannabis organizations alike.

She stated customers new to the legal organization planet generally method her workplace inquiring about workers’ compensation, overtime spend, and other non-cannabis distinct organization queries.

“Most of them haven’t been in organization prior to, at least not regulated organization,” she stated. “I generally inform them they have to comply with all the laws everyone else does.”

The court also noted that Congress has amended the Fair Labor Requirements Act “many times” due to the fact the inception of the Controlled Substances Act, but has not opted to consist of language excluding cannabis business workers from the law’s protections. 

McGrath named the case a routine Fair Labor Requirements Act choice comprised of equivalent details as these identified in other situations from reduce courts. In a single 2018 case cited in the choice, workers engaged in an illegal gambling organization had been identified to be entitled to the identical employment protections as workers in lawful industries, a single court held. 

In one more case in Oregon, a U.S. District Court judge similarly ruled in 2017 that the Controlled Substances Act did not exempt a cannabis testing firm from paying minimum wage or overtime to a courier who picked up samples. The court cited a legal tips memorandum written for the National Labor Relations Board referred to as the Wellness Memo that identified that just mainly because an employer “is violating a single federal law,” the memo study, “does not give it license to violate one more.”

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